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Scholarships


Produced by Tolley in association with
Employment Tax
Guidance

Scholarships


Produced by Tolley in association with
Employment Tax
Guidance
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Introduction

A number of employers make educational awards to individuals. For the individuals receiving the award, there is an exemption from tax in most instances. However, depending on the relationship between the individual and the employer, there may be a taxable benefit arising.

The main purpose of the legislation is to ensure that, where employers are providing a benefit to employees by meeting the employee’s child’s education costs, this will not be exempt as a scholarship. If these amounts had been provided by way of cash to the employer then it would have been taxable, therefore meeting their child’s school costs on their behalf should equally be taxable. See the School fees guidance note.

Scholarships

There are a number of scenarios to understand when looking at the taxable status of the payments.

HMRC’s guidance on scholarship income is at EIM06205–EIM06275.

The scholarship holder is a third party to the employer

There is a general exemption from income tax for a scholarship under ITTOIA 2005, s 776 if the person receiving the scholarship is in full time education.

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Philip Rutherford
Philip Rutherford

Senior Tax Director at Molson Coors Brewing Company

Phil is the Senior Tax Director for Molson Coors' European operations. He has responsibility for both direct and indirect taxes across both EU and non-EU states. Prior to this, Phil was responsible for Molson Coors UK tax affairs covering all major taxes and duties.   Phil trained at KPMG LLP, where he worked for 8 years, specialising in tax investigations across both direct and indirect tax.

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  • 10 Jul 2024 10:31

Home/ Tolley Tax Guidance/ Employment Tax / Providing benefits to employees

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